Amending COA & HOA Governing Documents

By September 20, 2016 No Comments

Most COA (Condominium Owner Associations) and HOA (Home Owner Associations) are governed by these legal documents:
• Articles of Incorporation
• Bylaws
• Declaration of Covenants, Conditions, and Restrictions (CC&Rs)

While associations are not legally required to amend their documents, it’s something that will probably need to happen eventually for one or more of these reasons:
• Directors need current provisions to understand their duties and responsibilities.
• Accurate legal requirements for the preparation and distribution of financial reports.
• Legal changes to time limits for notices of meetings.
• Documents that don’t accurately describe members’ rights or legal procedures.
• Changes in rules regarding meetings, participation by members and telephone meetings.

COA & HOA documents should also be reviewed and amended to eliminate:
• Obsolete provisions and those no longer observed or enforced.
• Provisions that conflict with current laws.
• Provisions originally intended for start-up activities or those that include the developer.
• Poorly drafted or ambiguous provisions.
• Mistakes and errors.

Ideally the Association should tailor the documents to fit the living experience of owners by providing for changes in technology (such as satellite dishes, home office use, etc.) and to make documents more “user-friendly” with better organization, table of contents and descriptive paragraph headings.

To incorporate all the changes in statutory and case law, legal experts suggest that Association documents be updated every five years.

Typically, the revised documents are first approved by the Board. The current COA/HOA documents will spell out what type of vote is required for approval. Some Associations require a super majority vote with 75 percent of the total membership. Lender protection provisions may need a 2/3 or 3/4 vote of the members. Additionally, some basic legal rights cannot be changed by amendment without 100 percent approval. In some cases, certain amendments need to be approved by the city or county.

Most associations hire legal help from firms who specializes in the drafting of COA/HOA documents. When boards try to save on attorneys’ fees by creating an initial draft of the documents seldom, legal experts say that it rarely results in any savings.

LM Funding provides funding solutions to condo and homeowner associations (COAs & HOAs) to recover delinquent association dues and guaranty future association budgets using proprietary technology.